The exchange below is from an interview Hedgeye CEO Keith McCullough did back in July 2014. It offers a quick glimpse into why McCullough doesn’t pull punches when it comes to calling out unaccountable market pundits, commentators, etc.

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Q: You have been very vocal about your feelings towards holding stock market commentators accountable for their public recommendations or analysis of stocks. What made you begin speaking up about this?

KM: It all gets back to the founding principles of Hedgeye – Transparency, Accountability, and Trust. If we don’t #timestamp every call we make, how on earth can serious investors evaluate whether or not they should pay for our services? There is an “us vs. them” overtone to this culture war we are waging on Twitter with some of Old Wall’s newsier pundits, because the differences between what we do and what they do are significant.

We spend most of our day producing proprietary research views so that we can debate the sharpest Institutional Investors in the world on our Best Ideas. We are in their offices and in their inboxes and on their phones.

We aren’t trying to be an inch deep and a mile wide across 5,000 securities in hopes of generating advertising revenues. We aren’t trying to spin everything positive for either our own book or banking revenues either.

I probably come off as a threat to the one-man know-it-all-bands out there because I should. I have a big team that’s proving itself at the highest level, each and every market day. In many ways we are the other team, so I don’t expect those we are competing with to support us. We want to stand on the front lines for both individuals and institutions so that the opacity of Old Wall investment recommendations won’t crush their returns again.

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European Banking Monitor: Sharp Pullback in Greek Financials Swaps

Below are key European banking risk monitors, which are included as part of Josh Steiner and the Financial team's "Monday Morning Risk Monitor". If you'd like to receive the work of the Financials team or request a trial please email

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European Financial CDS - Swaps were mostly unchanged in Europe last week while Greek institutions finally tightened in unison given a positive development in bailout negotiations; Greece delivered a more detailed plan for its bailout to the International Monetary Fund on Wednesday.

Euribor-OIS Spread – The Euribor-OIS spread (the difference between the euro interbank lending rate and overnight indexed swaps) measures bank counterparty risk in the Eurozone. The OIS is analogous to the effective Fed Funds rate in the United States. Banks lending at the OIS do not swap principal, so counterparty risk in the OIS is minimal. By contrast, the Euribor rate is the rate offered for unsecured interbank lending. Thus, the spread between the two isolates counterparty risk. The Euribor-OIS spread was unchanged at 11 bps.

Takeaway: Here's a quick summary of what went down on the real estate front in 1Q15. Regional mall vacancies continue to outperform strip/community centers in the US with vacancy rates 220bps below the 7,000+ strip centers which sits at 10.1%. Only marginally off the 11% recession peaks. While rents at regional malls increased 1.8% in 1Q (driven in large part by 'A' properties) while stripe center occupancy rates creeped up by just 0.5%. Those are important data points given the questions we've fielded on KSS over the past few months in regards to the company's real estate optionality.

KSS operates just 7% of its stores in regional malls, the rest are split between strip centers (67%) and freestanding locations (26%). Besides the fact that the company owns just 36% of its properties outright, it has practically no exposure to the space's beach front property -- the 300 or so 'A' malls in the country. Strip center space is a dime a dozen, though construction has stalled out following the recession there is little demand to fill the vacant space. Plus negative sq. ft. events like the Office Depot/Max/Staples will continue to weigh on this space. Add on the fact that we are massively overstored in the US today, we average 46. sq. ft./capita, compared to #2 on the list the UK at 9 sq. ft./capita. That leaves KSS with very little ability to monetize its real estate assets.

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